FMCG firms focus on branded outlets to connect with buyers

By Arnab Dutta , Business Standard, New Delhi | In Marketing | September 30, 2016
Nestle, Amul and CG Corp have decided to focus on the channel.

At a time when imparting growth in sales from branded food retail outlets has become a major concern for restaurant chain operators in the country, fast-moving consumer goods (FMCG) firms such as Nestle, Amul and CG Corp have decided to focus on the channel.

While Hindustan Unilever (HUL) recently shut down Bru World Cafe, its coffee chain outlets, others remain committed to the business channel as it gives them significant exposure to connect with the consumers directly.

Packaged food major Nestle India has recently launched a new chain of branded outlets - Maggi Hot Spot. While the firm has opened its first outlet at Cyber City in Gurgaon, sources say, the company plans to extend it in the future. The initiative is part of the firm's confidence building and consumer-connect initiatives, that it has taken since the Maggi noodles fiasco last year. To bank on the demand for various dishes prepared with its instant noodles and pasta, the outlets will serve a number of cooked dishes.

In fact, Nestle India has of late changed its strategy for the channel. While, it currently operates about 300 outlets, it has changed their branding - from Cafe Nescafe to Nestle Touch Points. This helped them put products other than coffee on the shelves. Both Nestle and Amul operates these stores through its distributors under a franchise model, which helps them hedge against significant losses.

Amul, a major food firm, plans to expand its number of outlets by up to 1,200 a year, says R S Sodhi, managing director at Gujarat Co-operative Milk Marketing Federation (Amul). Currently, the firm has 8,500 Amul Parlours in defence establishments, residential complexes, shopping centres, railway stations, various top management and engineering college campuses, among others. "Such outlets increase our visibility, offer range of products to customers at one place where they can experience them, apart from branding and promotion", Sodhi said.

CG Corp, makers of Wai Wai instant noodles, recently ventured in food retail business by opening up Wai Wai City, a quick service noodle bar, in New Delhi.

According to experts, while HUL's Bru World was offering a single product category, coffee, other players' focus on expanding their offering in similar outlets have helped them survive. "Real estate cost is major constraint for players in the sector. However, since Amul or Nestle offer a wide range of products through them, they get higher footfall", said Dhanraj Bhagat, partner, Grant Thornton India.

Talking about opportunities that are available to Nestle in the out-of-home eating segment, the firm's Chairman and Managing Director, Suresh Narayanan told the company's investors it is an opportunity that clearly attracts Nestle's attention. "We have got strength as a business in this. In terms of eating out, share of fund spending is almost more than half and 70 per cent of consumers are eating out of home at least once a week", he said.

According to him, selling Nestle products such as chocolates, confectioneries and premium value-added items through outlets such as Hot Spot could be a thrust area for the future. "That is the orchestration of portfolio as we move forward", he said.